Dubai: 2018 went by like a breeze, and for many, so did their 12 months’ paycheques.
A whole year came and went. Do you have anything to show for it in your bank account, investments or perhaps, a newly-acquired property?
If you’re like some expats whose money went primarily to bills and payments and have no direct evidence of their financial gains in 2018, take heart. The mistakes of 2018 do not have to define your 2019.
As the New Year dawns and as you make your annual resolutions as most people will, losing weight and getting fit should not be the only priority. Saving and investing should be, too.
Those who are already disciplined savers and investors, the best New Year’s resolution is to share your tips and tricks with the ones you know aren’t. Find someone you can help by teaching him/her the ropes of financial discipline.
Making a lasting change
If you have yet to start, it’s not too late. As an expat, your income is still your biggest wealth-building tool. Decide — just decide — not to give it to banks, creditors, restaurants or shopping malls anymore this year. This new year is for you and for your future, as the next years are.
Bina Mathews, a Dubai-based life and leadership coach, trainer, motivational speaker and Master NLP coach, said for one to be able to make a lasting change, he or she just needs to be intentional in changing his or her behaviour and be dead set in achieving them.
The secret to an achievable goal is defining it clearly. You should be able to clearly see and spell out your target, not a vague concept or notion. Flesh it out as much as possible. Also, aim for something attainable and rational.”
“The secret to an achievable goal is defining it clearly. You should be able to clearly see and spell out your target, not a vague concept or notion. Flesh it out as much as possible. Also, aim for something attainable and rational,” Mathews told Gulf News.
It will also help if you “state it in positive terms with ‘I will’ rather than ‘I won’t’, Mathews said, and set a deadline.
For example, if you aim to save this year, set a target: “I will save Dh500 or Dh2,000 every month,” or “Every Dh5 bill I get will go straight to my coin bank apart from my savings this year”.
Many forecasters have painted 2019 as a gloomy year for the global financial world. But preparing for the worst always helps.
‘Volatility is part of life’
“There will always be people who will cringe and crib. So it’s better to focus on the positive as volatility is part of life. This 2019, stay focused on why you are here in the UAE which is often to be able to save money more than what you could save in your own country. Once you’ve done that, keep your expenses to the minimum and save and invest more,” Damodhar Mata, who specialises in the areas of Holistic Financial Planning, Investments and Insurance, told Gulf News.
Your New Year’s financial resolutions are up to you. However, since we want a good start to the new year, it’s best to learn from the mistakes many (or perhaps we) have made in the past. Make sure to tweak your money resolutions and steer clear of the oft-repeated common mistakes, according to Mata.
What Can You Do?
1. Build-up 3 months’ worth of emergency savings
A lot of people do not have adequate emergency savings, particularly expats. Lack of having a safety net makes them react negatively to every single negative news. But if you have three (or even six!) months’ worth of expenses or income parked as emergency savings, you’ll be able to cruise through life, including emergencies, with less drama and constant alteration of your financial goals.
2. Make a financial plan and monitor it
Financial planning helps you see where you were before, where you are now, and where you will be financially. If you do this, your old self will thank the young you now.
3. Make a budget and follow it
American author and speaker John Maxwell said: “A budget is telling your money where to go instead of wondering where it went.” Make a budget with your spouse and assign your dirhams before the month begins.
4. Save first and then spend what you have
The bank or your creditors do not put up with your crazy boss or put in the hours at your work, so don’t give them first dibs on your pay cheque. Again, pay yourself first by saving and investing before you spend the rest.
5. Invest your savings
Take note that this is not your emergency savings because that has to be liquid. This savings is anything beyond your contingency fund. Keeping all your money idle in a savings account that gives you meagrely interest every year is not wise as inflation could eat up a huge chunk off it annually. Educate yourself on the best investment tools available such as mutual funds, bonds, stocks, or property. But word of caution: Never invest in something that’s not vetted and something you don’t understand.
6. Diversify your investments
Nothing is sure in this world, especially with investments. So don’t park your money in one single investment. Spread out your risk by diversifying.
7. Do not borrow for impulsive purchases
Often, the interest on your borrowed money outlasts (for months or even years) the interest you have in the item you bought impulsively. In this case, you are the clear loser.
8. Never sign any financial document without reading
This is a common mistake of most people that needs no explanation. So read on.
9. Never make major financial decisions without discussing with your spouse/partner
Money fights are the biggest deal breakers even in strong marriages. The household income is for the household. Discuss where your dirhams should and shouldn’t go.
10. Do not issue a cheque without adequate balance in your account
Signing cheques in bad faith in the UAE is a criminal offence. Ensure you have enough balance or save up for the amount before the due date.
11. Do not borrow for or guarantee a loan for a friend or family
This is more of a personal decision and you have to be firm about it.
12. Plan ahead for vacation expenses
Unless your vacations come for free, they can take up often double or triple of your monthly budget. So save up for your vacation in advance. Don’t rely only on your salary for that month, it might never be enough.
13. Never invest in get rich quick schemes
Despite so many news reports on expats getting fooled by get-rich-quick schemes, many still forget to do basic due diligence before investing. If something is too good to be true, it surely is. So don’t do it.